The International Swaps and Derivatives Association, Inc. (ISDA) today released preliminary results from its 2011 ISDA Margin Survey at its 26th Annual General Meeting in Prague.
The 2011 Margin Survey reveals that, among large dealers, 80 percent of all transactions are now executed with the support of a collateral agreement. The process of reconciling collateralized portfolios shows steady advances in adoption. One hundred percent of large dealers and 73 percent of all survey respondents indicated that they pro-actively perform portfolio reconciliations.
“Market participants continue to expand their use of collateral to mitigate over-the-counter derivatives credit exposures,” said Conrad Voldstad, ISDA chief executive officer. “This is particularly true in the credit derivatives markets, where 93 percent of all trades executed were subject to collateral arrangements in 2010.”
This year, the survey asked 14 large dealers to indicate their levels of collateralization with Central Counterparties. The 2011 Margin Survey reports that the large dealers delivered approximately $41 billion of collateral as margin in Central Counterparties; $36 billion in their executing broker capacity and $5 billion in their clearing member capacity.
The 2011 Margin Survey also shows that active collateral agreements number almost 150,000, of which 90 percent are ISDA agreements. ISDA continues to further refine a strategic vision for the industry to make derivative processing more scalable, transparent and resilient in all asset classes.
ISDA and its members are consistently delivering market practice improvements within collateral processes aimed at improving bilateral risk management practices. Throughout 2010, ISDA and the industry remained focused on driving significant improvements in key areas, such as strengthening counterparty risk management – including greater use of clearinghouses; improving transparency; and building a stronger and more resilient operational infrastructure.
Significant progress in each of these areas has been achieved and continues to be
made as the industry works proactively and cooperatively with regulators and policy makers globally.
Of the 83 firms responding to the 2010 ISDA Margin Survey, 64 are banks or broker-dealers, and the remaining are institutional investors, government agencies and other end users.
